![]() The Federal Reserve has begun to raise interest rates and will soon begin to reduce its balance sheet to combat inflation and try to get prices back under control. In April, the Consumer Price Index, which measures what consumers pay for goods and services, was up 8.3 percent from the previous year and 0.3 percent for the month. Inflation is a problem in the United States and across the globe, with the US inflation rate near its highest levels in 40 years. With that in mind, maybe the best explanation of what’s going on right now is that there are a lot of reasons for investors to be freaked out, and so they are.Įmily Stewart’s column exposes the ways we’re all being squeezed under capitalism. There is never a singular answer for why markets do what they do, why stocks rise and fall, or why investor sentiment changes from one day to the next. There’s a lot to be anxious about on Wall Street and the economy right now “While we are seeing this broad-based sell-off in the market, and it does seem like you cannot avoid it, this isn’t exactly a time for panic,” said Kristin Myers, editor-in-chief of the Balance, a finance website. It’s also one most investors should likely try to weather - stocks don’t go down forever. We’re in the midst of quite a storm right now. “There is never a safe haven when the storm is in full force.” Everything moves together,” said Nick Colas, co-founder of DataTrek Research. “In market dislocations, correlations always go to one. Chances are if you look at your investments right now, you maybe aren’t feeling so great. In the broader recent picture, there really haven’t been many bright spots. Investors are anxious about what’s on the horizon and what policymakers are going to do about it. The long and short of it is that markets are bouncy and on edge. On Wednesday morning, after the release of the latest inflation numbers from the Bureau of Labor Statistics, stocks briefly slid before rebounding. Stocks fell late last week and on Monday before offering a modest reprieve on Tuesday. Bitcoin, which many proponents have long argued is a form of digital gold that could serve as a hedge for market turmoil, briefly fell below $30,000 more than once this week, less than half of where it peaked at nearly $69,000 in November 2021. Many names big and small in the tech sector, in particular, have been struggling. ![]() This week, the S&P 500 hit its lowest level in a year. Last week, the Dow and Nasdaq saw their worst single-day declines since 2020. The combined weekly number of new 52-week lows on the NYSE and Nasdaq has topped the amount of new 52-week highs for nine straight weeks, he said.Įven if the market rebounds in the near term, Delwiche said, "if you don’t have that regime shift where you get back to more stocks making new highs than new lows, then it's an oversold bounce that doesn’t go anywhere.The S&P 500, Dow Jones Industrial Average, and the Nasdaq are now well below where they were at the start of the year, down 16 percent, 12 percent, and 26 percent, respectively, as of market open on Wednesday. Indicators such as the AAII do not yet suggest the pessimistic sentiment is "excessive", which would be more clear if the spread between bulls and bears was wider, according to Willie Delwiche, investment strategist at Hi Mount Research.įor example, bearish sentiment stood at 56% in the AAII survey last October.įurther, notes Delwiche, stock market breadth has been weak. That was followed by a 28% rally in the S&P 500 through late July of this year. Yet the picture is not as clear cut as last year, when a brutal market selloff saw stocks fall to a nearly two-year low in mid-October. Market sentiment has turned more negative with the latest stock slide, with 41.6% of investors bearish and 30.1% bullish in the latest American Association of Individual Investors (AAII) weekly survey.īut rising bearish sentiment often works as a contrary indicator for stocks, suggesting plenty of investors are on the sidelines who could buy on positive developments. The average gain in those instances has been 10%. In the 14 instances when the S&P 500 has gained at least 10% through July and then declined in August, as it did this year, the index has increased every time over the last four months of the year, according to Ned Davis Research. Stocks have tended to perform well at year end - with November and December logging the second and third-biggest average S&P 500 monthly gains - though this year the trends may portend even more favorably.
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